UPDATE 1-Eli Lilly to pay $62 million in Zyprexa settlement

Tue Oct 7, 2008 9:27am EDT

(Adds details of settlement from company)

CHICAGO Oct 7 (Reuters) - Eli Lilly and Co (LLY.N) has agreed to pay $62 million to settle claims that it improperly marketed its top-selling Zyprexa schizophrenia drug to patients who were not approved users, the company said on Tuesday.

Lilly, which on Monday announced plans to acquire ImClone Systems Inc IMCL.O for $6.5 billion, said the Zyprexa payment would result in a third-quarter charge of 4 cents per share. Zyprexa is Lilly's biggest product, with global sales of $4.76 billion in 2007.

The settlement with 32 states and the District of Columbia ends an 18-month investigation of the Indianapolis-based company, which had been accused of promoting the drug for unapproved off-label uses and of playing down side effects such as weight gain, which can increase the risk for diabetes.

Lilly, which said there was no finding that it violated any state laws, nonetheless agreed to certain commitments regarding Zyprexa for the next six years under consent decrees filed in the various states.

The commitments cover the company's promotional practices, dissemination of medical information, funding of continuing medical education and grants related to Zyprexa, and continued disclosure of Zyprexa clinical trials and their results.

Lilly said it would also provide the attorneys general with information on compensation made to health care professionals who have received more than $100 annually from the company for promotional speaking or consulting on Zyprexa in the United States.

While doctors are free to prescribe drugs in any way they see fit, drug companies may promote them only for uses approved by U.S. health regulators.

The states participating in the agreement are Alabama, Arizona, California, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Vermont, Washington and Wisconsin, as well as the District of Columbia.

Eleven other states have filed lawsuits over Zyprexa and are not covered by the agreement, Lilly said. In March, the company entered into a $15 million settlement with Alaska, which ended a trial involving various issues surrounding Zyprexa.

Lilly has had previous Zyprexa settlements with patients. In January 2007, the company said it was taking a charge of up to $500 million to cover more than 18,000 claims from patients who said the drug caused them to develop diabetes.

And in June 2005, Lilly agreed to pay $700 million to settle about 8,000 patient claims. (Reporting by Susan Kelly; Editing by Lisa Von Ahn)